Predictions 2024: Data Streams, AI Arms Race & Real Time Analytics

Welcome readers to Part Two of our Predictions roundtable.

In this feature we gather several insights on data, cyber, innovation and future thinking. Insurtech has already achieved so much across the industry, but arguably utilising AI and automation to join up USEFUL data, is probably going to be the biggest step forward in a digital world.

Next year will be the litmus test in many ways for the value of data across the insurance sector. In a time of price inflation it must deliver real world results.

Let’s get started with Sam Kumarsamy, Director of Product Marketing at OpenText Cybersecurity, who sees a twin-track approach next year on cyber risks;

Predictions for Insurance Providers:

“Threat actors are creative and resourceful in their attempts to trick users and exploit software and computer vulnerabilities. Not surprising, the rapid rise of ransomware attacks has had a profound effect on the insurance industry. I predict the cyber insurance space will become increasingly competitive in 2024. In addition to an uptick in insurance companies including cybersecurity in their offerings to end users, I believe more new boutique players will enter the space focusing exclusively on cyber insurance. We can expect larger/traditional insurance providers as well as some security software vendors to acquire or partner with these innovative cyber insurance startups to offer a one-stop-shop to businesses.”

Predictions for Insurance Customers:

“The barriers for obtaining cybersecurity insurance are shrinking. This is good news for small- and mid-size businesses (SMBs), which may have varying levels of cybersecurity protection in place. Organizations can now obtain insurance with baseline protections like security awareness training, email threat protection and endpoint protection. And protection isn’t limited to preferred vendors, technology they may already have in place is often enough. As a result, I predict we will see an uptick in SMBs investing in cyber insurance in 2024. With cyber insurance, I believe the likelihood of SMBs surviving successful cybersecurity attacks will increase because insurance companies will offset some of the financial burden.”

INNOVATION GOES HAND-IN-HAND WITH CYBER PROTECTION

Kobi Bendelak, CEO at InsurTech Israel sees great opportunities for joining up platforms, data streams and more. But that has to be aligned with robust actions on cyber risks too;

“In 2024, the landscape of the insurance industry is undergoing significant transformations shaped by evolving global trends. As the world becomes increasingly interconnected, the importance of cyber insurance has never been more pronounced. The rise of technology and digitalization has ushered in a new era of risks, making cyber insurance a critical component of comprehensive coverage strategies.

One of the prominent global insurance trends in 2024 is the integration of artificial intelligence and data analytics. Insurers are leveraging these technologies to enhance underwriting processes, improve risk assessment, and streamline claims management. This not only enables more accurate pricing but also facilitates a quicker response to emerging risks.

However, with the digital revolution comes the escalating threat of cyber risks. As businesses and individuals alike rely more on digital platforms, the potential for cyberattacks has grown exponentially. The need for robust cyber insurance policies is paramount to safeguard against financial losses, data breaches, and business interruptions.

In the coming year, insurers are expected to focus on tailoring cyber insurance products to address specific industry needs. Industries with unique vulnerabilities, such as healthcare and finance, will see specialized coverage options designed to mitigate sector-specific cyber risks.

In conclusion, the global insurance landscape in 2024 is marked by a dual emphasis on technological innovation and the imperative to protect against cyber threats. As insurers adapt to these trends, policyholders can expect more tailored and responsive coverage, ushering in an era of resilience in the face of evolving risks.”

INSURTECH CHALLENGES

Over the last few years partnerships have really helped many insurtechs to grow rapidly. But can this momentum be sustained in an era when AI and automated systems do much of the admin and workflow in the insurance sector? Will insurtech partnerships be quite so important next year? The answer is yes, because integration of digital services is always going to be required by insurers, brokers and MGAs.

Nelson Castellanos, Chief Partnerships Officer, (pic below) HDI Embedded offers these thoughts;

AN AI ARMS RACE?

Everyone knows AI is going to make an impact, the question is how quickly and will insurance brands be able to exert a stronger influence on a particular sector of the market by deploying AI faster, or more effectively than their rivals? Designit’s Miguel Sabel, global director of strategy and sustainability thinks an arms race will develop next year;

“The intense competitive and even geo-politics power struggle that we witnessed throughout 2023 is set to persist into 2024. Amid this fierce competition, through internal information leaks, we have gained insights into how industry-leading companies acknowledge the challenges of maintaining a sustainable competitive advantage solely through their models. This difficulty arises not just from the threat posed by rival corporations, but also due to the proliferation of open-source models.

“In the realm of product and user experience, OpenAI has already pioneered the path for crowdsourced innovation with the rise of user-customised GPTs. A marketplace for these innovations is currently under construction, with the belief that “the best GPTs will be crowdsourced by the community.”

“Crowdsourced innovation can be a way to achieve more diverse, contextualized, and problem-specific products. These innovators will enter a highly competitive space that counts investments by billions, but why not be optimistic? How many knew about OpenAI at the end of 2022 when ChatGPT was released?”

REAL TIME DATA, ANALYSED BY AI

Integrated systems, with AI in the driving seat is very much how Paul Templar, CEO at VIPR sees next year. The insurance sector is moving into a new era of efficient and accurate data interpretation and it starts right now;

“As we step into 2024, the insurance markets are on the cusp of a groundbreaking era, driven by rapid technological advancements. This year is poised to be transformative, especially in commercial and large corporate risk insurance sectors.

Central to this transformation is the deepening integration of AI and machine learning. These technologies are evolving beyond traditional roles to become crucial in underwriting and claims processes, heralding a new level of efficiency and precision in the industry.

Real-time data is also becoming the new gold standard, revolutionising predictive analytics. Insurers are now equipped to make more informed decisions and anticipate market trends with unprecedented accuracy, offering a competitive edge in assessing portfolios and proactive risk management.

As data takes a central role in operations, we anticipate a surge in personalised, flexible insurance products tailored to unique customer needs. In 2023 and into 2024, the insurance markets are not just embracing data; they are redefining the future with it. The move towards real-time data has seen VIPR play an integral role in this transition, moving away from traditional data processing methods to dynamic, real-time systems. This shift emphasises not only speed, but the quality of insights derived from timely data, improving business processes but also underwriting accuracy and risk management.”

CAN DATA DRIVEN CAR INSURANCE TURN THE CORNER?

There have been two binary choices dominating the car insurance market in the UK for decades, TPF&T and Fully Comp. So will 2024 see a much bigger uptake of pay-per-mile insurance products, which haven’t really broken free of the Fleet sector up to now? Jonathon Valentine CIO at ThingCo thinks it can happen.

DIGITAL COMING OF AGE

Next year will be a sort of coming-of-age for insurtech, according to Isaac Richardson, Insurance Sector Specialist, at IPI, who sees technology enabling more personalisation of products and insurance services.

“2024 will see the insurance sector come of age as it embraces digital innovation and customer engagement practices more akin to those seen in other industries. The sector will adopt more digital channels, offering customers choice over contact methods and providing insurers with a more granular understanding of their customers – essential as they seek to provide the stellar experience that customers crave.

“Increasing levels of personalisation more aligned to the individual needs and values of customers will be pivotal to the delivery of this enhanced CX. In fact, we’ll start to see the introduction of more personalised insurance products, such as car insurance rewarding customers for environmentally friendly driving. By aligning products to customers’ ethics and values, insurers have the potential to reposition themselves as a valued part of consumers lives, rather than purely a ‘grudge’ purchase. 

“Technology will play a central role in the delivery of these trends – and will be a key tool used by disruptive industry players to boost efficiencies and counter the price rises expected – particularly in home and motor insurance. Across the board we’ll see the adoption of AI-based tools, such as speech analytics and quality monitoring, to help flag vulnerable customers in real time, alert a call handler to fraud, and ensure all staff are acting in a compliant manner. 

“The year ahead is likely to see the sector stride ‘digitally’ ahead. The savvy use of technology will enable insurers to constantly learn and refine, enabling it to deliver an ever-improving experience to customers.”

THE START OF AI AND HUMAN PARTNERSHIP

Decision-making is at the heart of any business and in a highly regulated market like insurance it’s important that AI decisions are compliant, fair and transparent. The soft skills that humans have developed over several thousand years will have to be learned, and deployed without prejudice in the market. It’s a big challenge, but there will be a gradual series of steps forward next year, says Allison Arzeno – CEO, Assurance IQ: 

“For years, recruiters and business leaders have told technical employees that they need to develop more soft skills and learn how to better communicate with business executives to get ahead. As AI continues to transform the insurance industry, I think we’ll see the script flipped on its head: more CEOs and business executives will need to develop data and analytics skills.

Insurance industry executives already need to have broad business experience spanning risk mitigation, marketing, and financial planning to lead organizations. In 2024, that must expand to include experience with data and analytics. A study published in 2023 found that most business leaders lack the confidence and qualifications to make data-driven decisions. Nearly three quarters, or 72%, said they have avoided a decision because they had too much data or didn’t trust the data available to them.

As more insurance companies lean on AI, machine learning, and data science to make every decision, leaders’ limited data literacy will become unacceptable. Insurance decisions made by AI have massive potential to disrupt the economy, influence health outcomes, and drive further inequality if they aren’t made responsibly and with the right context.

Trust in data and AI will be paramount to making smart decisions, but that trust can only come through understanding. Executives will need to understand how their company collects and structures data, where their data infrastructure could improve, and its limitations to be able to effectively use AI in 2024. That means data infrastructure, quality, security and integrity can’t simply be delegated to IT or software engineering teams. All executives must be intimately familiar with what they are putting into AI, in order to act on what comes out of it with the appropriate context.”

TRANSFORMATION CONTINUES

Janthana Kaenprakhamroy, CEO and Founder of Tapoly sees more scope for refining AI, in terms of its particular use in different parts of the insurance chain. Customisable transformation is going to happen in 2024.

“The insurance sector is experiencing a profound transformation through the integration of data analytics and artificial intelligence (AI). These technologies are reshaping how insurers operate, manage risk, and engage with their customers. Here are some of the key trends propelling this evolution:

Predictive Analytics: Insurers are leveraging predictive analytics to assess risk more accurately. AI models analyze extensive historical data, enabling precise predictions of potential claims and fraud, empowering insurers to make well-informed underwriting decisions.

Personalization: AI-driven algorithms enable insurers to tailor policies and premiums to individual customer profiles. This personalization enhances customer satisfaction and loyalty while optimizing pricing strategies.

Claims Processing Automation: AI-driven chatbots and virtual assistants streamline the claims process, delivering faster, more efficient service to policyholders. Machine learning algorithms assess damage, estimate costs, and expedite claims settlements.”

REAL TIME ANALYTICS

Richard Jones, VP of Sales in Northern Europe at data-streaming specialist Confluent sees AI having a powerful effect on underwriting;

“As it stands today, the underwriting process can be slow-moving and compromise on accuracy, undermining customer satisfaction across the board. That’s because they are heavily dependent on manual intervention.

 With the advent of AI capable of interrogating high-volume, high-value data, this is changing. Throughout 2023, customers have witnessed first-hand how various industries use AI to automate basic processes, and thus now have a desire to reap the rewards across all services that they use – without sacrificing that human touch.

 Going forward, insurers will appreciate that it is not data alone that is vital to them, but the speed at which data is analysed and acted upon – pushing the industry towards real-time data analytics throughout 2024. With insurers understandably risk averse, we expect to see such systems deployed to improve risk assessments, identifying data points with risk characteristics to provide a more accurate insurance cover.

However, it’s also clear that neither consumers nor insurers are keen on a fully automated system with zero manual input. But even a commitment to automating as little as 20% of business operations could revolutionise an insurer’s performance – and thus their standing amongst both competitors and consumers.”